IRS Announces Interest Rate Increase for the First Quarter of 2019
The Internal Revenue Service recently announced that interest rates will increase for the calendar quarter beginning Jan. 1, 2019. The rates will be:
- Six percent for overpayments (5 percent in the case of a corporation)
- Three and one-half percent for the portion of a corporate overpayment exceeding $10,000
- Six percent for underpayments
- Eight percent for large corporate underpayments
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point.
The interest rates announced today are computed from the federal short-term rate determined during October 2018 to take effect Nov. 1, 2018, based on daily compounding.
Revenue Ruling 2018-32, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2018-51, dated Dec. 17, 2018.